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What is the balance

What is the balance

The balance represents the difference between revenues and expenditures of the company for a certain period of time.

It can have a positive and a negative value.


The term balance can be viewed from the standpoint of accounting and foreign trade operations.

The balance in the accounting records

In accounting balance - the difference between theamounts of debits and credits, or between the amounts of income at the expense of businesses and write-offs. The balance reflects the state of the company's money on a certain date.
There are debit and credit balances. Debit balance occurs when the debit over credit. He is recognized in the balance sheet assets.
The credit balance reflects the situation where the creditgreater production rate and is shown in the balance sheet liabilities. If there is no balance on the account (zero balance), it is called closed. In accounting separate accounts can simultaneously have two types of balance - debit and credit.
In practice, not analyzed the whole history of bookkeeping accounts, but only a single time period, for example, the last month or quarter. The following parameters are distinguished In this approach to the analysis:
- Opening balance - it reflects the balance of the account at the beginning of the period (for example, at the beginning of the month) -
- The balance of the period - a synthesis (total) results of operations for a certain time promezhutok-
- Debit and credit turnovers reflect changes in the balance of funds on the account for a certain period-
- Closing balance - account balance at the end ofperiod, calculated as the sum of the opening balances and debit turnover less the credit balance for the negative balance of the amount of the loan balance and the turnover deducted debit turnover.

The balance of the balance of payments

In the balance of foreign trade relations is analyzedin terms of the difference between the amount of exports and imports over a certain time period, often - for the year. We differentiate between the balance of trade and balance of payments.
The trade balance - the difference betweenexport and import turnover. It can be both positive and negative. The foreign trade balance can be calculated for regions, individual countries or groups of products.
The trade surplus arisesin case of excess of exports over imports, and suggests that the country sells more abroad than it buys. It is also said that the country does not consume the entire volume of production, as well as the increased demand for its products in the international market. In Russia in recent years, the trade surplus, mainly due to exports of energy and metals to foreign markets.
The negative balance indicates excessimports over exports. It is believed that the deficit is a bad trend for the state signal that the market is dependent on imports. It also testifies to the infringement of the interests of domestic producers and the low competitiveness of export of manufactured goods. IMF points to the usefulness for the economic development of a positive trade balance. The negative balance of trade often leads to a depreciation (devaluation) money in these countries.
But it is not always a negative balance of trade -negative effect on the economy. For example, in the UK and the US (country with a negative balance), it allows to contain inflationary pressures and to move labor-intensive production to countries with cheaper labor.
The trade balance is the basis of the balancebalance of payments. The latter represents the difference between the foreign receipts and payments abroad. The surplus of the balance of payments is observed in excess of income over external outgoing payments. The negative balance indicates excess of payments over receipts from country to country.
The deficit leads to a decrease in foreign exchange reserves of the country, so many countries have sought to maintain a positive balance.

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